Business is nonexistent three weeks before and two weeks after. While sales tax holidays are often defended on grounds of economic benefits, in reality, a key motivation has been attempting to stop cross-border shopping, and perhaps even lure shoppers from other states. People may want to spend money on travel, restaurants, or related industries, but are unable to do so safely right now. The number of categories has expanded in recent years to include specific appliances, hurricane preparedness supplies, and even firearms. But these exemptions also benefit high-income taxpayers, while narrowing the base and necessitating a higher tax rate. The sales tax holiday raises the price of these items relative to backpacks and so students are influenced to purchase the backpacks. [25]  See in Worrell, “Sales Tax Holiday A Bust For Some Retailers”: “Corprew said larger corporations and department stores have the luxury of big computer systems to calculate tax-free items, but for a small business like her clothing shops, she and her partner spend hours photocopying receipts and organizing sales information just to make sure everything is accurate and in order. [28] Texas exempts layaway sales as well as shipping, handling, and even installation costs as part of its Energy Star product tax holiday. [26] Virginia’s sales tax holiday permits layaway sales and rain checks, does not permit rebates to lower the sales price, and excludes shipping but includes handling. Rev. Beginning with 2018, the sales tax holiday is permanent. As a 501(c)(3) nonprofit, we depend on the generosity of individuals like you. Instability in tax law is costly to the economy not only because of complexity but also because it disrupts the plans and expectations of consumers and businesses. [36]  An exception would be where there is a negative externality, or societal cost, caused by consumers postponing their purchase. Lawmakers are likely to be under strong political pressure to provide ever expansive exemptions, and businesses are required to track and comply with these year-to-year law changes. Sales tax holidays neither promote economic growth nor increase purchases. Tax holidays are a political gimmick that distract policymakers and taxpayers alike from real, sustainable, and economically beneficial tax reform. A narrow tax base is non-neutral and inefficient. [3] Not included in our list are Ohio’s and Michigan’s 1980 sales tax holiday for car purchases, nor four state gas tax holidays adopted between 2000 and 2005 (Florida, Georgia, Illinois, and Indiana). But if the shoes are in very high demand, a retailer may have to raise the price to avoid running out of stock too quickly—or may choose to do so because a higher price is now revenue-maximizing. [19]  See Kendall Hatch, “Restaurants Seek Their Own Tax Holiday,” The Taunton (MA) Daily Gazette, Feb. 7, 2011. Even states that have codified them can suspend them. § 105-164.13C; Okla. Stat. [25], Sales tax holidays force businesses to operate under more than one set of sales tax laws each year. § 12-407E; Ga. Code § 48-8-3(75); Iowa Code § 423.3(68); La. Which includes children, teachers, and staff getting regularly tested. The group stated its proposal would be stimulative and pointed to a survey that 82 percent of consumers favored a sales tax holiday and that 69 percent said they would make purchases they otherwise wouldn’t make. Stat. The sales tax holiday gave hope of reducing border shopping without the need to actually reduce the state’s sales tax rate. This extra burden represents a real cost to businesses, particularly small businesses, as valuable resources are diverted to pay for compliance with and implementation of sales tax holidays. Online shopping also is exempt from tax during the days. Rather than providing a valuable tax cut or a boost to the economy, sales tax holidays impose serious costs on consumers and businesses without providing offsetting benefits. [34] See Pat Hatfield, “The Mystery of Florida’s Vanishing Sales Tax Holiday,” The Deland-Deltona (FL) Beacon, July 8, 2008. But it was New York that sparked the modern trend, with the first sales tax holiday for clothing in 1997. The tax-free weekend in Texas took place from August 7 through 9, 2020. Hurricane and emergency preparedness products: Portable generators up to $1,000; gas-powered chainsaws $350 or less; other specified hurricane preparedness items, $60 or less per item. Best Presidents Day Sales to Shop in 2020 Presidents Day weekend is your chance to save big on mattresses, appliances, furniture and more. In an effort to reduce this regressivity, items viewed as basic necessities, such as groceries, utilities, clothing, and prescription drugs, are often exempted from sales taxes in the United States. The arbitrary selection of products granted a sales tax holiday runs into additional problems when the seasonality of demand is considered. Tax codes should be as simple as possible. If policymakers want to save money for consumers, they should cut the sales tax rate year-round. Alabama When: July 17–July 19 What: School supplies less than $50, books under $30, computers under $750 and clothing under $100. Supporters claim that sales tax holidays stimulate the economy. Tax holidays 2020. [17] Politicians claim that sales tax holidays largely pay for themselves through increased economic activity and new collections. [8] As noted tax scholar John Mikesell has put it, “State lawmakers are in the position of making a politically attractive decision with the cost of that decision being borne by someone else (local lawmakers), [a condition] ripe for poor policy choices.”[9]. Energy Star and WaterSense products: $2,500 or less per item, Los Angeles and San Diego districts announced they will start the year online, Here's how educators, including home-school teachers, can save 15%. If the citizens of a state determine that there truly is a legitimate need to help low-income consumers obtain particular products, a more targeted and effective approach could be a rebate or voucher program. If the retailer raises the price to $51 or $52, the retailer absorbs a large share of the savings intended to go to the consumer. The total tax bill of the average Canadian family, which includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, carbon taxes, and import duties, to name a few, is estimated at $43,681 for 2020. § 144.049; N.M. Stat. This was not re-enacted in 2008-09. If Tax Day falls on a Saturday, Sunday or holiday the deadline to file taxes will be extended to the next working day. https://taxfoundation.org/va-sales-tax-holiday/; Virginia Tax, “Guidelines for Combined Sales Tax Holiday,” May 31, 2018, https://www.tax.virginia.gov/sites/default/files/inline-files/2018-sales-tax-holiday-guidelines.pdf. [14]  See Micah Cohen, “A True Cause for Celebration: DC Cancels Sales Tax Holiday,” Tax Foundation, July 22, 2009, https://taxfoundation.org/true-cause-celebration-dc-cancels-sales-tax-holiday/. In 2020, 16 states will conduct sales tax holidays, down from a peak of 19 in 2010 and unchanged since last year (see Table 1). These sales tax holidays, therefore, function as a tax break but do little to shift demand curves. Can shopping malls survive the coronavirus pandemic and a new slate of permanent store closings? It is possible that shifting sales forward could help some struggling retail businesses, but the sudden economic halt was caused by a public health crisis—not a lack of desire for consumer spending. ©2020 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org State and Local Sales Tax Rates, 2020 Key Findings • Forty-five states and the District of Columbia collect statewide sales taxes. The Tax Foundation is the nation’s leading independent tax policy nonprofit. www.revenue.alabama.gov/sales-use/sales-tax-holidays, https://tax.iowa.gov/iowas-annual-sales-tax-holiday, https://dor.mo.gov/business/sales/taxholiday/school/, https://tax.ohio.gov/wps/portal/gov/tax/home/news/sales-tax-holiday, www.tn.gov/revenue/taxes/sales-and-use-tax/sales-tax-holiday.html, https://comptroller.texas.gov/taxes/publications/98-490/, www.tax.virginia.gov/virginia-sales-tax-holiday, Your California Privacy Rights/Privacy Policy, Technology: Single purchases $750 or less of computers, computer software and school computer supplies, Clothing accessories or equipment: Less than $50, Select school supplies, school art supplies and instructional materials: No limit, Clothing, footwear and accessories: $60 or less, Computers and accessories: $1,000 or less per item, School supplies: Not to exceed $50 per purchase, School supplies and instructional materials: $20 or less, Computers, computer parts and accessories, printers, ink: No limit, Books and musical instruments: Tax-free if “used for school assignments.”, Computers, tablets, smartphones, televisions, video game consoles: $3,000 or less, School supplies and backpacks: Less than $100. 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